WAC 458-20-24003 explains the tax incentive programs available for persons engaged in qualified research and development or pilot scale manufacturing in five high technology areas. These incentive programs include:

The sales and use tax deferral program provided by chapter 82.63 RCW; and
The business and occupation tax credit program provided by RCW 82.04.4452.
This rule has been amended to recognize E2SHB 1597 (chapter 106, Laws of 2010). This legislation establishes that only those applications for the high technology deferral that have been approved are not confidential and subject to public disclosure.

458-20-24003

03/01/10

WAC 458-20-24003(Rule 24003) explains the tax incentive programs available for persons engaged in qualified research and development or pilot scale manufacturing in five high technology areas. These incentive programs include:

The sales and use tax deferral program provided by chapter 82.63 RCW; and
The business and occupation tax credit program provided by RCW 82.04.4452.
The Department amended Rule 24003 to recognize SB 5909 (chapter 268, Laws of 2009). This legislation establishes that under certain circumstances multiple qualified buildings leased to the same person are eligible for the deferral program.

Sales/Use Tax Deferral/Waiver
Program & B&O Tax Credit Program Extended and Revised Small Business
Grants Exempted from B&O Tax

High
Technology/ Incentives

08/09/2004

High Technology Business Tax
Incentives (Issued Feb 2005)

07/22/1998

High Technology B&O Tax
Credit Rate Change

DIRECTIVE:

RPM:

WTD:

23 WTD 280

03-0254

B&0 TAX RESEARCH AND DEVELOPMENT ("R&D)
EXEMPTION DEVELOPMENT OF NEW DRUGS.Payments which a pharmaceutical company gives a physician for treating
patients and recording the results as part of new drug trials do not qualify
for the B&O tax exemption allowed for R&D.Taxpayers activities are neither the
discovering technological information nor translating technological
information into new or improved products, processes, techniques, formulas,
inventions, or software.

24 WTD 187

04-0138E

B&O TAX -- R&D CREDIT -- ENVIRONMENTAL CLEANUP.All environmental cleanup activities are
not necessarily qualified research and development (R&D).While non-routine activities, which
translate technological activities into new or improved processes, constitute
qualified R&D, the process becomes routine when repeated to meet specific
contractual "deliverables" (e.g. cleaning up a specific area).These routine cleanup activities are not eligible for the credit.

26 WTD 206

04-0180E

RCW 82.04.4452:R &
D B&O TAX CREDIT COMPUTATION PAYMENTS TO SUBCONTRACTORS. The R&D
tax credit can be computed using either the expenditure or compensation
method, not a combination of both methods.Taxpayers using the expenditure method must exclude payments to
subcontractors.

26 WTD 241

07-0115

RCW 82.32.600(1): HIGH TECHNOLOGY B&O TAX CREDIT
PROCEDURAL REQUIREMENTS FILING OF ANNUAL SURVEY AND TAX RETURNS
ELECTRONICALLY.Entitlement to the
High Technology B&O tax credit requires taxpayers to file annual surveys
and tax returns electronically. The Department correctly disallowed the
credit when a taxpayer failed to meet that procedural requirement.The fact that the taxpayer may not have
received a courtesy call from the Department reminding it of the requirement
does not relieve the taxpayer from that requirement.

27 WTD 136

07-0363

RULE 24003; RCW 82.04.4452
B&O TAX -- HIGH TECHNOLOGY CREDIT.Real estate rental expenses and patent attorney fees are not qualified
research and development expenditures under RCW 82.04.4452 and Rule 24003.

32 WTD 35

11-0052

02/27/2013

RULE 24003(4)(g)(i); RCW 82.63.010(13): RETAIL SALES AND USE TAX –
HIGH TECHNOLOGY DEFERRAL –-PROTOTYPES. Ingredients and components of prototypes are not “qualified machinery and equipment” for purposes of the High Technology Tax Deferral, even though the prototypes may be reasonable and necessary in the development of a qualifying product.

32 WTD 35

11-0052

02/27/2013

RCW 82.08.02565(2)(c)(viii); ETA 3126.2009: RETAIL SALES AND USE
TAX -- M&E EXEMPTION – PROTOTYPES. Ingredients and components of prototypes do not qualify as exempt M&E, even though the prototypes may be “integral” in the development of a new product.

33 WTD 1

13-0037

02/03/2014

RULE 24003; RCW 82.04.4452: RESEARCH AND DEVELOPMENT CREDIT – CALCULATION – APPORTIONMENT OF INCOME. Compensation for conducting qualified R&D equals 100% of the amount Taxpayer received for conducting qualified R&D in Washington, regardless of whether some of the income from that activity is apportioned outside of Washington.

33 WTD 171

13-0358

05/31/2014

RULE 24003; RCW 82.04.4452, RCW 82.63.010: HIGH TECH R&D CREDIT – QUALIFIED RESEARCH –AFFILIATE – CIMLINC. Two affiliated corporations could not claim the high technology R&D credit for the same research performed by one of the affiliates.